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SOLVED: Given the reduced-form equations of the goods market (IS curve) and the money market (LM), respectively, as follows:FI(Y", i; Co, Mo) = y"Co - c(Y, i) = 0;F2(Y", i; Co, Mo) = L(Y, i) - Mo = 0;0 0, Li < 0,where L(Y, i) is the demand for money, Mo is the supply of money, and Co is autonomous consumption. Take the total differentials of both reduced-form equations above.ii) Rewrite your findings in i) into a matrix of the form Jx - b.iii) Measure the effect on the equilibrium levels of Y"
SOLVED: Given the reduced-form equations of the goods market (IS …
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